Citigroup's better-than-expected earnings report turned the tide ahead of the open.
The dollar fell against the euro on Thursday as U.S. data on construction and jobless benefits delivered a mixed picture, while major American banks reported better-than-expected earnings.
Factory activity in the U.S. Mid-Atlantic region shrank again in July, reflecting a weakening economy and the strain of rising costs.
The number of U.S. workers filing new claims for jobless benefits rose by a less-than-expected 18,000 last week to 366,000 on a seasonally adjusted basis, a Labor Department report showed on Thursday.
China's economy slowed in the second quarter under the weight of slower exports and a drive by the central bank to tighten credit, but inflationary pressures remained uncomfortably high, the government said on Thursday.
Earnings from J.P. Morgan and some other big companies could sway the market's early direction, but traders are closely watching oil to see if it will make or break the upswing in stocks.
The global financial crisis is far from over—threatening to leave Federal Reserve interest rate policy on hold indefinitely.
Stocks closed with huge gains as drop in oil prices boosted sectors previously battered by energy costs. Financials also moved sharply higher.
U.S. Federal Reserve policy makers fretted at their most recent meeting that growing inflation risks may require an interest rate hike, but agreed that the outlook for both prices and growth was still too uncertain, minutes of the meeting showed.
Below is the statement released by the Federal Open Market Committee after its June 24-25 meeting on interest rate policy:
The dollar rose against the euro and yen Wednesday, moving further from Tuesday's record low against the euro, on positive earnings news from Wells Fargo and lower oil prices.
Federal Reserve Chairman Ben Bernanke told a House panel Wednesday a top Fed priority is restoring financial calm even as "too high" inflation and weak growth threaten the economy.
Stocks pushed higher as oil plunged for the second day in a row and financials staged an across-the-board rally that stemmed investor pessimism about the effects of inflation on the economy.
US industrial production unexpectedly rebounded in June by 0.5 percent, its biggest jump in nearly a year, as utility and mining output soared and manufacturing reversed two months of declines, the Federal Reserve said on Wednesday.
Consumer prices in June rose by the biggest amount since 1982 on a continued surge in gasoline prices, adding more weight to an economy struggling through a strained banking system and a housing downturn.
Oil's move could be a key trend in Wednesday's markets, as traders watch more Fed testimony, a bunch of earnings reports and another helping of inflation data.
The dollar rebounded from record lows versus the euro on Tuesday, supported by a sharp fall in crude oil prices and a rise in U.S. stocks.
Housing finance giants Fannie Mae and Freddie Mac have the potential to pose systemic risks to the financial system and need a stronger regulator, U.S. Treasury Secretary Henry Paulson said on Tuesday.
President Bush urged lawmakers to move quickly in putting into force legislation designed to help prop up mortgage giants Fannie Mae and Freddie Mac while declaring the nation's financial system to be "basically sound."
A weakening housing market, a strained banking system, and rising oil prices threaten the U.S. economy, and restoring financial market stability is a top priority, Fed Chairman Ben Bernanke said.